According to Bloomberg News, just over 1,000
Americans gave up their nationality in the three months from
January to March. That’s a significant increase from the 670 who
did so in the same time span last year, and it’s already one
third of the way to matching the total number of Americans who
renounced their citizenship in 2013.

Last year, data from the Internal Revenue Service showed that
approximately 3,000 Americans gave up their passports – a number
that tripled the average of the previous five years.

Although the reasons for doing so can range from one individual
to another, many of the cases have been linked to the Foreign
Accounts Tax Compliance Act, which has been gradually taking
effect since it was passed in 2010. Looking to crack down on tax
dodgers and institutions that help make that behavior possible,
Congress passed the legislation in the hopes that it would bring
in hundreds of billions of dollars in unpaid taxes.

Since the US is one of the few countries that taxes its citizens
regardless of where they live, however, the law has ended up
ensnaring all Americans who live and work overseas and use
foreign accounts to pay bills at home. As of 2012, all banks
working with the US are now required to divulge information on
their accounts held by American citizens.

"[Congress] said to all of these institutions, 'You need to
follow this set of criteria to determine all of the Americans who
are your clients," Wisconsin financial adviser David Kuenzi
told National Public Radio, "and you need to report directly
to us on their holdings.' "

This has caused headaches for many foreign banks – including UBS
AG and Credit Suisse – who are being forced to decide between
incurring high compliance costs for each American account holder
and simply ending their relationship with them. As noted by
Bloomberg, making sure overseas Americans are filing the right
tax forms costs banks about $7,000 per person, while individuals
themselves can pay out $4,000 to remain on the right side of the
law.

“I feel caught in the battle between the government and the
banks,” John Annen, a 46-year-old American mathematician who
has lived for more than decade in Switzerland, said to Bloomberg.
“The U.S. government is the biggest threat to my style of
living.”

As a result, some foreign banks are declining to do business with
overseas Americans and canceling accounts, while increasing
numbers of US citizens are contemplating giving up their
nationality.

“Those banks have been checking through accounts and
informing clients they have a big tax problem,” US tax
lawyer Matthew Ledvina said. “The number of people renouncing
their citizenship will probably rise as the banks enforce U.S.
tax rules.”

According to NPR, there are so many Americans in Switzerland
looking to give up their passports that the US Embassy there has
a waiting list.

Despite this, many Americans said the money owed is not the
overriding issue, but rather the hassle of dealing with all the
new regulations, as well as the fact that they are now dealing
with foreign banks that no longer want their business.

"They've become so complicated -- the increased filing
obligations over the years," tax lawyer Brad Westerfield
said to CNN in February. "You see more people giving up their
citizenship or relinquishing their green cards ... Individuals
[are] wanting to simplify their financial affairs, and just pay
tax and report to one jurisdiction."